tv Bloomberg Markets Middle East Bloomberg April 5, 2017 12:00am-1:01am EDT
♪ yousef: theresa may flies to saudi arabia. the london stock exchange wants her to lobby for a role in aramco's appeal. trump prepares for a difficult talk with the president of china. billion dollar order from iran, a major test for u.s. relations. >> and washington has worries about westinghouse. officials don't want the reactor builder to go to china.
yousef: it is a 4:00 a.m. in london, this is "bloomberg markets: middle east." >> it is midday in hong kong. we are seeing some markets in the red. take a look at the go function. although markets are in the red, we have some strong players. with forceming back from its today holiday. yuanouth korean won -- declining. we're seeing a pretty good session or strength for price on time. the taiwan dollar continues to rise. the japanese yen has climbed for four days against the dollar. we are seeing copper following 8/10 of 1%. keep an eye on jp morgan and
goldman sachs. that is the picture in asia in trading. what do you have for us? yousef: as part of the world, a two-hour delay on the emirates markets. this was the state of play. the benchmark index up half of 1%. we're seeing strength in materials and industrials. as we got best performer in this part of the world. if you take a look at the technical, that broke through three moving averages in one goal. also watch out for first abu dhabi bank, driving a lot of those gains. we're seeing some interesting moves in qatar, up one half of 1%. also egypt, a lot of foreign buying. let's look at some of the key risk assets. crude, $41 per barrel. big moves overnight.
the api was set to report a trend in inventory. we get a little more flesh on that data when api reports that state appeared -- reports its data. south african rand very much in focus. 13.63%. that has recovered some of its bosses -- losses. shery: let's get a check of first word headlines. boeing has won a $3 billion contract from iran in a possible test of president trump's ability to work with iran. it is for 30 737 planes. they say it could sustain up to 18,000 u.s. jobs but some lawmakers have voiced concerns. dollars --a 16.5 and
being finalized. jeffrey lacher has resigned over of role in a 2012 week confidential information about the central bank policy options. he admitted he should have been inform thatailed to he spoke with an analyst with confidential information. he was due to resign in october and was not a photo this year. theresa may says u.k. can help saudi arabia lower its have womenon oil and in the workforce. she is on her first official visit to saudi arabia, where she will meet king later today. asked the prime minister to rally for a position at the aramco ipo. there is uncertainty following present you must cabinet purge. investec saw more than $450
million wiped out its value on friday when cabinet changes were announced. also put other's companies in review. poised to review a mixed ownership plan, a plan to drop private capital. information, soon as today. shares hong kong were suspended pending announcements along with those with affiliates. in recent months, you come has signed agreements with baidu, alibaba and tencent. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. trump and hisent chinese counterpart set to hold the first meeting on thursday.
the white house is alarmed that the chinese could bid for the westinghouse nuclear business. tom joins us with more on the story. for years, chinese have expressed interest in the nuclear reactor builder paid -- builder. how likely is it this will come up in the meeting? the toshiba unit. there have been accusations that the chinese have spied and tried to still secrets from westinghouse previously. there are steps underway in washington to try to prevent any chinese entity trying to buy was tryinge toshiba to spin this into profit-making and there is a theory in washington that the money could come in the form of investment in a venture capital fund,
hidden chinese funds to buy the unit. they're trying to prevent that. broader set of tensions. we saw previously a strong, a german chipmaker and barack obama blocked the chinese from buying that chipmaker. say they are unfairly discriminated against by the committee for investment in the u.s. and this is a prejudiced stance from the u.s. and they are blocked out from some of these deals. but the upside is the chinese government themselves are making a bigger play at checking these deals before they go ahead with chinese to u.s. investment. this goes into what will be likely talked about at the meeting. these tensions, and we have talked with experts about what to expect. with an advisor to the chinese government and they said they will look for clarity on
what the policy stance are, what the priorities are for trump, whether that is bilateral trade tax inborder adjusted what is happening at the white house in terms of who is winning the tug-of-war in terms of the china policy. whether that is peter navarro -- steve been in, or bannon, or gary cohn. it is a lot of clarity the chinese are hoping to get from the meeting. shery: i wonder if we're going to get clarity on where they stand on north korea. they just conducted another missile test, trying in a way to inject themselves into this conversation between the two leaders. will china come under further pressure from donald trump? tom: they are already under pressure from trump. this is likely to exacerbate that. the u.s. is that the chinese these play a stronger role here. 20 years ofid that
diplomacy have failed in a preemptive strike was ruled out. there is a gulf between washington and beijing when it comes to dealing with north korea. this is a key clinical -- key geopolitical pressure point and donald trump want some traction from the chinese. whether they give it to him is another question. movement on it will be key. shery: thank you so much for joining us. now let's look at the impact of president trump trade policies on asian markets. economistchief joining us now from singapore. thislet's start with meeting. how much progress can we expect on trade? rob: i think that will be of the most interest. i think at the moment, the investor view is the number one
topic of conversation is north korea. or is uncertainty regarding trade. how much discussion is there going to be and how much this agreement or is going to be. i think the interesting thing is ,ent trump has been president there was a lot of talk before he became president about trade protectionism against china and asia, but since he is been president, aside from tpp, it has been conspicuously absent. this is going to be the meeting where the white house starts to shift its focus to china and asia on trade protectionism? it is a risk. yousef: that is the key here, isn't it? will the status quo be maintained? or whether there will be a tangible shift in policy. which one would you put your money on and wife? -- and why? ultimately, if you
believe that trump is very passionate about wanting to reduce the u.s. trade deficit and bring back manufacturing jobs to the u.s., he really can't just focus on mexico. the u.s. trade deficit with mexico is not that big. the big fish to fry are more in asia, and china. the u.s. trade deficit with china is more than six times than with mexico. i think ultimately there is going to be a shift to trade restrictions on asia. the timing is hard to pin down. when itbe now or maybe u.s. growth starts to tail off again? it is tough to tell. i think certainly this week, the risk is rising getting this meeting, this could be an important event that shifts focus. shery: quickly, tell us what are the most exposed asian
currencies right now. we are the taiwan dollar and korean yawn -- you want strengthening. lookingdid this report at who is ultimately most exposed to u.s. exports. it is tricky. trade is so much value added now. especially places like mexico and china. what you need to do is this and tangle the value added in mexico's exports, china's exports, and reassignment to the original source countries. once you have done that and taken the direct exports to the u.s., the final thing you need to do its scale it by the dep, that gives you a better metric of overall exposure. what you find is different outcomes. looking at that progrowth do all these you
adjustments, mexico slides down to number six most exposed. what you find is that out of the 10 most exposed countries, six of them are in asia. done the work properly and taken into account the value added, especially a lot of these countries like korea, taiwan, malaysia that do a lot of value added in chinese exports, you find the real exposure to the u.s. is really in asia and it is countries you mentioned, particularly in northeast asia. yousef: you are sticking around because we want to talk more about what is happening with the fed and some other areas, as well. it's get you up to speed with the roundup of the middle east stories you need to go -- need to know. we had the new edition of daybreak." subscribers can find it on their terminals. story, jbe the top
dines -- jamie dimon contemplating something is wrong with the u.s. economy. there are other stories. it have oil, the french election, it is all very concisely laid out. even on the left, you can customize it, but on my stickers. i have things related to south africa, so i get all the stuff around that. .e have in dab securities he will tell us why he thinks stock valuations in the uae are attractive. while egypt is raising alarm bells. shery: first, we talk about which middle eastern economy could be the most formidable. -- could be the most vulnerable. this is bloomberg. ♪
the first check of the headlines. china has one u.s. antitrust approval for a takeover of a pesticide maker, reading their largest foreign acquisition one step closer to the finish line. the two companies are being told to divest of three pesticides in the u.s. as a condition for completing the $43 billion deal. alsouropean union is reviewing the tie up and chinese authorities have their own discussion. yousef: dhp is counting the cost of its strike in july. construction has resumed. copper agency says the destruction probably means up to 30,000 tons worth more than $1 billion at today's prices. shery: saudi arabia will adjust
the benchmark, a concession to refiners that have complained about their ability to hedge using the current measure. from july, saudi crude will be sold in africa, europe and latin america de son settlements. -- based on settlements. they use the daily weighted average. yousef: let's bring rob back in, chief economist for asia. i pulled "daybreak" up again. transcript,n at the he points out something is wrong very clearly. it is holding us back. it is something pointed out in the gadfly article you can pull up on the bloomberg. what he is citing is labor force participation rate, and for structure spending and education. he disagrees with the idea the slower growth and lower
productivity are a permanent feature of the u.s. economy. agree or disagree? moment,hink at the potential growth in the u.s. is .oing to stay weak i think a lot of the policies trump is proposing, to me are more short-term fixes in terms of getting growth stronger, but it is not really helping the supply-side of the economy. you need education investment, you need investment in research and development. i'm not sure they're going to come through quickly. i think the risk is maybe demand runs ahead of supply and you could potentially see inflation eating up. picking up. the survey data is a lot stronger than the real activity data. i think gdp tracking estimates for q1 are well below 2%. also in the u.s., we
those are asia. asia is most exposed. yousef: we see some big move in emerging markets over the next 24 hours. the moves in repricing. i brought out the wtf function. you can see year-to-date basis of market functions. on the downside, you have the turkish lira. how is this picture going to change? which is likely to underperform here -- underperform here? rob: i think so far this year, we have seen a lot of countrie'' currencies investors thought were exposed to protectionism have done very well. mexico, korea, for example. this meeting between a trump and the chinese president, if there is a big focus on protectionism again, i think we could see weakness, particularly in the asian ones. korea, taiwan, singapore. the currencies i think could hold up relatively well are more because in emia,
basically are not that exposed to the u.s. protectionism. shery: you also mentioned southeast asia, the ringgit could suffer. rob, thank you for joining us. asia x japanst for viewed coming up, the latest from abbott gabby, where a bank merger has created the uae's largest bit -- linda. this is bloomberg.
♪ shery: you are watching bloomberg. i am in hong kong. yousef: and i am in dubai. haddhabi's benchmark has big gain since december after getting a boost from the city's biggest lender. they've seen a 5% rise. here with us to talk more about what is behind it is tracy. before the merger, we heard all
or a good chunk, saying don't buy the stock. now looking at the price, it is remarkable. tracy: pretty remarkable. it is the first week of trading of the combined entity. it is trading under the ticker. but we are seeing some fireworks over the past few days. shares are up 3.4% yesterday. what is driving that? it is down to benchmarks and indexes. a entity, it is flows. it speaks to the power of index funds and benchmarks as well. shery: the other big mover has been abu dhabi national energy company. run-up.e a big is this all speculation? now -- it is aht
really interesting story. last week, we had that big write-down and in the first two days of trading after that huge write-down, he saw the shares move up something like 24% over the course of two days. lots of people talking about either consolidation being taken over by another government entity or a potential delisting. share pricehe action took a turn for the worse. down 7%.em a lot of people wondering why. that the abuews dhabi water and electricity company had hoped its -- upped its stake. does that make it trickier? it is difficult to say. probably the biggest hurdle for such a move is the fact that the majority of shareholders in taqa
are nationals and they would have to be compensated if we had a delisting. it is difficult to say, but i think we will talk a lot more of this and we might get a moment of truth in the form of a shareholder meeting scheduled on april 19. expect to discuss this lots more in the future. yousef: excellent reporting. let's get you up to speed with another feature on the bloomberg, our interactive tv function. i will pull it up right here. show.n watch back the you can take a look at a specific function. you have screenshots with all the key functions within the emerging market basket. you have snippets from our interviews and key data points. you can see some of the key traits. check it out. you can also send us messages if you agree or disagree. avoidsup, theresa may
♪ >> it is 12:30 in hong kong. these are first word headlines. the un security council will hold an emergency session on wednesday after an apparent vehicle weapon attack in syria killed at least 50 people. western leaders have condemned the reported use of gas on a town. itsident trump called reprehensible and said it cannot be ignored by the civilized world. syrian state media said the gas came from a rebel weapons factory. china became the biggest buyer of u.s. oil in february, surpassing canada like quadrupling its purchases. just over 8 million barrels in the month, boosting u.s. exports
for a record 31 million barrels. canada's crude orders fell 21% from a month earlier. the surge in american shipments to asia haven't as opec is trying to drain the global glut. -- expressing concern over the public display of pre-disunity. the initial with with a series of bullet points within the party and said that fiscal policy has not changed. it condemned partners for calling for the presence removal. cabinet officials have returned to brussels for an emergency meeting as they try to make a stalemate on bailout negotiations. the finance minister, his deputy in the label -- labor minister spoke ahead of a friday meeting of eurozone ministers and multiple it talks of been delayed for months as the severity of austerity has been disputed.
global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ yousef: thank you. let's see what is happening with the latest market action. build it and they will come you'd we are saying these very strong rallies come through from china you'd building somebody's lifting the csi 302 high of the year. elsewhere, a little bit of trepidation in today's market. , sore waiting the minutes there is been pullout in terms of caution in the markets. you have that yen fluctuation, off about one third of 1%. also a little bit coming through on the afx 200. it is pretty flat at the moment. i want to show you some of these moves we are seeing in terms of the shanghai as it came back online after the two-day break. you can see these building companies really lifting.
on monday.5% you can see all of these construction companies have the -- have hit daily limits. there is a lot of building giving a big boost to some of the building company's. i want to quickly show you what we are seeing in terms of the oil market. rising quite sharply, above $51 per barrel after we saw the u.s. coming through. shery: thank you so much. let's go back to china. a sources telling bloomberg that the china unicom and affiliate are about to announce mixed ownership reform plans. so, this seems to me like a broader approach -- broader push to reform this bloated sle. what do we know? announce ashey will
soon as today, and that we will what is happening in the company. we don't know the details, including which elements will be involved. yousef: do we have any idea at this point why baidu, alibaba and tencent would be involved? at this moment we don't. there are a lot of rumors speculating they would be involved because they have a cooperation agreement with the company. that is why there are rumors. shery: china unicom is suspended in trading right now, but how important is this for investors, for them to look at this ownership reform? prudence: from investor
perspective, this reform wall allow the company to have greater visibility -- flexibility as they will be able to increasentrol the competitiveness of the china unicom. with: prudence joining us latest on china unicom. we are looking forward to hearing more about this deal. yousef, it is part of reforming those big state-owned enterprises in china. yousef: absolutely. the other big story, theresa may. she says the u.k. can help saudi dependence onts oil and increase the participation of women in the workforce. she is on her first visit to saudi arabia and will meet with the king later today. beenhe pride minister has asked to lobby for a role in the ipo.
let's bring in our guest, the managing rector of indie 80 securities. ndad securities. as we look at this, what strikes you at the moment? think valuation is the most important in my mind today. the main point of why would saudi go for an ipo of 5% of the company is really to create the of the kingdom of saudi arabia. ton we heard this dropped 400 billion to one billion. , i don't think that can be improved. it will not be hitting one of the main objectives of why the saudi government is doing that. the other thing is i think affect how the interest has risen in the saudi market, that
is a great benefit that has not felt in market people putting money, but investors are coming in and asking for licenses, all of this is in effect of the talking of the aramco ipo. yousef: that usually has an effect on surrounding markets. on that note, i pulled up some technical details. there been some interesting things over the last few sessions. you can see i put three moving averages on their. your 200 day. the last one, it has broken through some of these, as well. zoom sessionnd the and it doesn't pop up. what i'm trying to point out is you have this convergence of these three lines. the dubaiur read on market from a technical perspective? inamed: i think we start april. march was a week month.
a lot of shares were trailing. we saw some pressure on the prices. beginning of april, now we go into the q1 season. we are seeing some positive move on the leading stocks. this is i think in advance of these expectations of the q1 being announced. therefore we see it now, turning the tide. i think it breaks the level of around 3650, which would be around average, we could talk into going to a bullish move and reversing what we had in march. shery: how do you feel about banks? we are seeing a customer deposits in uae in the banking system expanding in the last couple of months. is this a trend? how long will the deposits mobilization accelerate? mohammed: i think it is an important indicator because it
is after the slowdowns we have seen the pressure on the ofuidity in the brakes -- the banks in the second half of 2016. this could be telling us we are seeing an upside. i think this is mainly driven or helped by the increased average of oil prices, which started toward the end of the year. -- expectations for pre-17 2017. this is what we're seeing in the banking sector. i think this increase in the liquidity is important. we see reflected on the libor, the ybor. i think it's us continues, the banks will be more aggressive in lending, which will help to turn the cycle, the economic cycle on the upward after 2016. -- after october.
is this a positive improvement for liquidity situations in the region? mohammed: of course. it could help the positive sentiment across the market. i think what we have seen is there is less talk about the andluation of the reality all of that stuff, it is known removed. people are focusing on the positive side and businesses able to show positive growth. i think efficiency, the big bulk of the intrusion, the efficiency, lowering of cost has taken lace and we have seen most of it behind. i think toward the end of the year we should hear more aggressive growth stories rather than cutting costs stories in those markets. shery: stick around because you are very important to us.
you will be the judge for the next segment. securities.ector of staying with us. i hope he remembers that. be very kind when i say he is very important. yousef and i are facing off. yousef: i love how you laugh before a fight. interesting strategy. i am ready for this fight. bring it on. this is bloomberg. shery: bring it on. ♪
♪ shery: you are watching bloomberg. i am in hong kong. yousef: and i am in dubai. that schedule up to speed with the latest headlines. the philippines central bank is a saying there is no urgent need to raise interest rates and are expecting to ease after the third quarter. the governor says he thinks price growth to reach a most 4% this year. they may not rush to
tighten even as economists predict the philippines will be the first southeast asia country to hike this year. -- extending their partnership in a's and -- asia-pacific. paypal have been barred for transactions. this allows users of either system to choose how to pay. paypal expect to roll out the deal elsewhere in the world after asia but has not decided where. yousef: qatar's bank is said to someone to help them with their merger. the national bike of qatar is likely to be absorbed in a three-way merger. they have yet to name banks for the deal but a plan to issue new shares.
expect completion of the deal within six months. bigy: jamie dimon has two statement in his annual letter. america is an exceptional country but it is clear something is wrong. he runs down the ways the u.s. a stronger than before but has a longer list of what he calls self-inflicted problems. some of those include the trillions of dollars don't in wars and the rising debt for students. a shift in tone for him there. tonef: there is a shift in but there is also a confirmation of some of his firm belief in the strength of the u.s. economy and ability to grow. also pointing out that excessive regulation. that is not entirely new, you can find out more on the bloomberg right now. guest,et back to our securities.ector at
something is clearly wrong, that is a direct quote from jamie dimon's letter. you were like, you need to look at the data. really, i think what he is trying to say mainly is we cannot talk about the economy and continue the growth rates of 2% and 2.5% expectation. is that in some of the data coming now for example about weakening in car ines, which is a big factor the s&p performance, you see the consumer overstretched in terms of credit because the u.s. economy relies on the u.s. consumer. that is the majority. the other thing he talked about is he prepared some of the
people for a very hard brexit. he talked about moving people there to a place like ireland. i think talking about the economy or investment banking, i think there are changes that will be seen in the coming two years that i think he is trying to compare people four. wrote the labor market participation is low. we are expecting a big data event out of the u.s. on friday. any thoughts on the labor market in the u.s.? othered: nothing major than the consensus, expecting the same level in terms of the numbers we have seen, if we're above 180 or 190, that is acceptable. in thep from last year u.s. has dropped to 5.7%. they will be very limited in terms of their effect on the
unemployment number. i doubt we will see a big move that will change strategies in the short term. primary dealers are showing divergence in u.s. tenure paper, that is critical. we've seen interesting movements from a technical perspective, because that is key. ultimately what we're seeing is a phenomenon that usually leads to flattening. there is no consensus on this trade. he of both side of the trade representative and this is where it leads the yield curve at. which side of the trade are you one? mohammed: i'm surprised at some of the moves i've seen in the lowering of the yield. an -- bothsite has sides have two meetings. i think there is more consensus for three increases in the year. i think it is also the unwinding of the trump trade in my mind. the health care being pulled out. i think that tells us in terms of yield that the appetite for
risk is less and now they park their money a little bit until they have a more clear view of what is happening. march in my mind was one of the more volatile months across many asset classes. yousef: that is a good point to pick up on. now it is time for battle of the charts. related to what we were talking about. it is about the amount of federal reserve tightening christ into markets. -- tightening priced into markets. there is a slight shift of of expectations. it does have gone down to the lowest level since november. pull up on your bloomberg. this is what we're looking at. the balance sheet changes may show for a hike expectations, and this is the chain -- this is the case for the fall and through midsummer next year. as makes clear the situation.
after the comments we got from the fed officials, after some of the indicators in terms of the balance sheet, this is what matters at this moment. shery: now, i want to be a little bit more optimistic about what to expect in the markets. we have been talking about reflation trade dying and this being the last of it. my chart gives a little bit of a boost to the reflation reviews. this is from jpmorgan and their evidence is that you're on your percentage gain -- year on year percentage gain is against a 10 year treasury yield, which has moved in tandem. the thinking is that robust global manufacturing should boost pmi reports, which we are already seeing, which should lift bond yields and lift reflation traits including u.s. financials. this is a more optimistic view. mohammed willhat
appreciate the effort here to show a positive sign when it comes to the reflation trade. mohammed: i am definitely a more optimistic person. can i call it a draw? draws? you call honestly, i am more a positive person and i think the markets will show, they will be better in 2017. yousef: that is not making a call, you have to pick a winner. shery.d: i will go for [laughter] sentiment and we want to stay on the positive side of the fact remains the various asset classes are flashing different signals. s&p 500?ve, wobbling what are you looking at to gauge
the state of the global economy in what the markets will do? mohammed: honestly, i really think stability is what is important. if we see a lot of protectionism, i think that will be a negative for the market. if we see high risk activities happening, like what is happening in south east asia with north korea and some of the trump andth president china. the geopolitics could be a positive. i believe looking forward in terms of sentiment, and leslie have a tightening -- unless we have a tightening of rhetoric, we should be ok. yousef: it has been a pleasure having you here. still to come, we have clashing over europe in the latest french presidential election. this is bloomberg. ♪
♪ yousef: you are watching bloomberg. i'm in dubai. shery: and i'm in hong kong. you're looking at markets in asia, the mix. what are you watching as you wait for the emirates to open? yousef: we discussed earlier some of the technical indicators, so watch out for moving averages in the rsi. in terms of specific companies, the property firm in saudi arabia, they have gone ahead sorry, a billion -- five years, price probably the low to mid 7% area. also watching what is happening on the water down index -- broader dow index. ino, shift of expectation demand, and we have seen stock
move dramatically and short sellers betting against circuit shares. let's look at what we are looking forward to in european trading day. focused on very much the french election. not many weeks to go before we get to the first round. 11 hopefuls took to the television screens yesterday in a debate. marine le pen was facing even more euro skeptics you'd fillons hollande -- considers himself to be the real frexit candidate. two polls rated bring the pin only fourth out of the 11 intel convincing their performances -- fourth out of the 11th performances in convincing them. on the left wing, they did pretty well.
couple of polls put their candidate ahead. we're watching how the markets are repairing for this french election. it is the next test for populist support in the eurozone. french election is one part of the coverage. what is the other big story that has caught your eye? >> we are watching u.k. politics. we have the prime minister in saudi arabia today and will be meeting with the king later on today. she plans to offer help to saudi dependence onring oil exports and increasing the participation of the women in the workforce. probably hoping some of this will detract from the u.k.-based becausem of the visit of the human rights record in saudi arabia. brexit, we're watching philip hammond on a visit to india. yousef: that is all we have for
conducts a korea missile test, ahead of the first face-to-face meeting between .rump and xi the richmond fed president abruptly resigns over his role in the 2012 league of confidential information. french hopefuls fastow. candidates covered everything from the nations debt to ethics. marine le pen defends her human rights campaign. some conservative party members don't one of brexit deal with the european union.